SMTN Limited is a listed company that operates in the pharmaceutical sector. The company's annual accounts for the year 2023-24 were audited by a…

(a) 1. Functions and Duties of National Financial Reporting Authority [NFRA] Section 132(1A) of the Companies Act, 2013, provides that National Financial Reporting Authority shall perform its functions through such divisions as may be prescribed. Further section 132 (2) read with rule 4, 6 to 9 of the National Financial Reporting Authority Rules 2018 lays down the functions and duties that NFRA shall perform, namely: The Authority shall protect the public interest and the interests of investors, creditors and others associated with the companies or bodies corporate by establishing high quality standards of accounting and auditing and exercising effective oversight of accounting functions performed by the companies and bodies corporate and auditing functions performed by auditors. Without prejudice to the generality, the Authority in particular shall: (a) Maintain details of particulars of auditors appointed in the companies and bodies corporate governed by NFRA; (b) Recommend accounting standards and auditing standards for approval by the Central Government; (c) Monitor and enforce compliance with accounting standards and auditing standards; (d) Oversee the quality of service of the professions associated with ensuring compliance with such standards and suggest measures for improvement in the quality of service; (e) Promote awareness in relation to the compliance of accounting standards and auditing standards; (f) Co-operate with national and international organisations of independent audit regulators in establishing and overseeing adherence to accounting standards and auditing standards; and (g) Perform such other functions and duties as may be necessary or incidental to the aforesaid functions and duties. 2. As per section 132 (4) (c) of the Companies Act 2013, where professional or other misconduct is proved, NFRA have the power to make order for: (A) imposing penalty of: I. not less than one lakh rupees, but which may extend to five times of the fees received, in case of individuals; and II. not less than five lakh rupees, but which may extend to ten times of the fees received, in case of firms. (B) debarring the member or the firm from: I. being appointed as an auditor or internal auditor or undertaking any audit in respect of financial statements or internal audit of the functions and activities of any company or body corporate; or II. performing any valuation as provided under section 247, for a minimum period of six months or such higher period not exceeding ten years as may be determined by the National Financial Reporting Authority. NFRA can take the above actions against the audit firm JJ & Co. based on its findings upholding the allegations raised by the group of (even) minority shareholders.